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Prescription drug distributor McKesson Corp. headquarters is seen in San Francisco. AP McKesson could be in trouble for allegedly favoring one big hedge fund over another. The American
health-care services and information technology company is being sued by Magnetar Capital over McKesson's January purchase of German competitor Celesio, a health and pharmaceutical
company based in Stuttgart. Magnetar, the $10 billion firm based in Evanston, Illinois, led by Alec Litowitz, claims that McKesson broke German law by paying rival hedge fund Elliott
Management 30.95 euros for each Celesio convertible bond it held—while others got the equivalent of 23.50 euros, according to Magnetar. The firm said that McKesson should have offered to pay
more than 370 million euros to minority shareholders and bondholders of Celesio. Convertible bonds offer buyers the chance to "convert" them into company stock later on. The bonds
typically gain in value along with the stock. "Under German takeover law, minority shareholders are entitled to receive the minimum price paid to all other shareholders. Several
Magnetar funds are filing suit today to enforce these protections and recover damages," Magnetar said in a statement Wednesday. "If McKesson's transaction is allowed to stand
without addressing the divergent prices paid to different shareholders, this precedent would upend safeguards designed to ensure fair treatment of all shareholders in corporate takeovers in
Germany," Magnetar added. Read More The news was first reported by _The Wall Street Journal_. Spokesmen for Elliott and McKesson did not respond to a request for comment. Paul
Singer's Elliott, which manages more than $24 billion overall, bragged about the deal in an April letter to investors. "We are pleased with the outcome and with the constructive
role that Elliott was able to play in ensuring the success of the transaction," the letter said, noting that the firm had sold its entire position in the first quarter. Read MoreWhat
stocks are hot? Top picks from CNBC guests... Singer's firm had previously noted its role in the Celesio deal, which it helped facilitate by accumulating more shares and convertible
bonds after an initial bid for the company didn't meet shareholder requirements. "We believe that without our involvement the bidder would have struggled to complete the deal, and
that we were able to use our size and understanding of German takeover processes to be instrumental in making the transaction possible," Elliott said in a January letter to investors.